Running Head: Economic Development of Singapore
Name
Institution
Date
Outline
Introduction
Discussion
Conclusion
Introduction
Singapore is one of the few countries in the world with the most competitive and strongest economies in the world. The economic situation was however, very different forty years ago when the country was under British colonial rule. Singapore was faced with severe unemployment problems and shortage of housing facilities to the citizens. During the colonial period, Singapore was made a commercial port that served the Southeast Asia region in terms of maritime economies. About forty years ago, when Singapore became independent, the country was ranked among the third world countries with less than 320 US dollars in the GNP per capita. Soon after independence, the population of the country was growing at a terrific rate, the infrastructure was in a devastating condition, and the unemployment rates were rising.
According to Yuen, 2005 a substantial number of the country’s population was living in squatter settlements and slums on the fringe of the city. It is worth noting that the economy of colonial Singapore was based on entrepôt trade. Nevertheless, this kind of primary production in the country and its economic activities did not create enough employment opportunities to the rapidly growing population in the country. After the British troops were withdrawn from Singapore, the unemployment situation became worse as the country had to create more employment opportunities as well as improve the housing conditions.
The only viable means of alleviating the unemployment conditions as well fostering economic development in Singapore was through industrialization as recommended by the United Nations Industrial Survey Mission (UNISM). It therefore followed that the prime target for Singapore was primarily establishing industries that required intensive labor. Industrialization in Singapore was however a new phenomenon since the country had not engaged in industrial activities before. Most of the country’s population was experienced in other activities such as service, trade, and processing activities rather than industrial activities. It therefore follows that there were very few individuals in the country with expertise in the field of industrial institutions. According to Goh, 1963 without government intervention, industrial establishment in Singapore was not easily adaptable. This was because the domestic market in post- colonial Singapore was too small to be able to accommodate numerous industrial establishments. It became apparent that the success of industrialization efforts in Singapore could not be realized without a deliberate government intervention and support.
Consequently, in 1961 the new government of Singapore established The Economic Development Board (EDB) to substitute the Singapore Industrial Promotion Board (SIPB). The EDB was established with the primary objective of promoting rapid development in the economy, creating new employment opportunities, as well as spearheading rapid industrialization program in the country. Unlike the Singapore Industrial Promotion Board (SIPB), which had it staff consisting of the a confidential secretary and a manager only as well as S$1 million revolving fund, the new Economic Development Board (EDB) was furnished with S$100 million for purposes of boosting rapid economic growth in Singapore. In their work Seetoh and Ong, (2008) state that the Economic Development Board (EDB) was given the authority to fund activities such as manpower development, industrial establishment, provision of incentives, promotion, as well as development of industrial estates. It should however be noted that the functions and responsibilities of the EDB became more complex with the development of industrial establishment in the country, and as such there was an urgent need to redesign the functions of this board for purposes of effective implementation of its mandate.
Discussion
In light of the need to streamline the functions of the EDB, the government of Singapore established the Development Bank of Singapore in 1968, which was a public limited company to take over from the EDB the function of industrial financing. Further, in the same year the government established the Jurong Town Corporation (JTC), another statutory board charged with the responsibility of developing industrial estate. These two functions were initially performed by the Economic Development Board (EDB), and as such the board could now concentrate with the function of investment promotion.
In a bid to attain its objectives, the Economic Development Board (EDB) embarked on a mission to establish offices for purposes of investment promotions across the globe. The EDB further, embarked on acquiring technology, information, manpower, and finance from all over the world, while at the same time promoting foreign investments. During the initial years when the EDB was formed, the board gave many industries tariff protection, tax holidays, pioneer status, as well as attracted numerous foreign investments. In an effort to promote rapid industrial establishment in Singapore, the Jurong Town Corporation (JTC) designed viable industrial estates with the require infrastructure for such purpose. In the year 1971 for example, the Jurong Town Corporation (JTC) established a program of training workforce from Singapore in other countries which were industrialized. Such training programs included Philips in Holland and Rollei in Germany to mention but a few. In addition, the JTC established training institutions in the field of design and technology within Singapore (Haque, 2004). These training institutions were established in conjunction with other countries such as France, Germany, and Japan.
The Economic Development Board (EDB) on the other hand gave the necessary development fund for purposes of boosting the process of manpower training in Singapore. It therefore, follows that Singapore made a deliberate effort to heavily invest in the education of its workforce for economic development in Singapore. Consequently, these developments in Singapore brought about full employment as well as drastic economic growth.
As the leading sector, manufacturing had contributed greatly in the economic growth of Singapore by the end of 1960s. As a matter of fact, study shows that the manufacturing sector contributed up to 18% of Singapore GDP by the close of that decade. In addition, the structural outlook of the Singapore changed tremendously in the sense that the economy was no longer based on the long-established entrepôt trade but there was an additional sector in the economy which was the industrial sector. According to Yuen, (1991) Singapore had attained the level of full employment in the country by the begging to the 1970s. The rates of GDP were very high in Singapore during the period 1965-1986 which went as high as 8% to 10% per annum.
In the 1980s, the economy of Singapore was based on five main sectors. These sectors included: export-oriented manufacturing, the regional entrepôt trade, production of goods and services for use by the local consumers, refining of petroleum and shipping, and finally the international market with specialized services for instance tourism services, telecommunications services, as well as banking and finance services. The tremendous growth in the manufacturing sector of the economy particularly in the 1970s and 1980, was a major boost to the economic development in Singapore and the society at large.
The economy of Singapore largely depended on the sale of services as well as international trade. The entrepôt trade involved economic activities such as sorting and processing, wholesaling, currency exchange, warehousing, credit, ship repair and provisioning, risk management, adjudication of disputes arising from commercial dealings in the country, and business information. In the 1980s further advancement were made, Singapore began to produce precision optical instruments as well as assembling different components of electronics. The country further took as an economic activity the process of grading and sorting rubber and pepper (Kim, 2006). All these economic activities contributed a great deal on the economic development of Singapore not to mention the wide pool of employment opportunities that were created as a result.
Following the Singapore heavy reliance on external suppliers and market, the country had no choice but other than to embrace free market, economic openness, and free trade. It is worth stressing that Singapore was a free port in the 1980s with a few tariffs that were basically protective and countable revenue tariffs. These tariffs were however, awaiting abolition in the following decade as it so happened. Further, during the 1980s, Singapore never had any form of system that would control prices in the domestic arena and the country also never had a foreign exchange control bureau. The country had no control on private investment and enterprise; there was also no control on capital repatriation or a limitation on the remittance of profit. In addition, the government solicited for huge foreign investment and a substantial number of corporations were entertained in the county.
Consequently, during the 1980s foreign investments in the manufacturing sector had risen to about 70% of the total manufacturing sector in the country (Seetoh and Ong, 2008). The government also played an important role particularly in creating the necessary environment for both the local and foreign investment. The government did this through providing an administration that was effective and free from any form of graft, a genuine concern for the challenges encountered in the business world, and a high-quality infrastructure.
Since the country dependent highly on the foreign market, it became vulnerable to the unpredictable market conditions of the world. In an effort to take full advantage of the situation, the government of Singapore adopted an economic system with a dominant role of the government in terms of the management of macroeconomic. The government also went ahead to take control of the essential factors of production for instance capital, labor, and land. Another factor that greatly contributed to the rapid economic development of Singapore is the high rates of savings within the domestic economy. These domestic savings in turn provided the much needed reserves to the country’s economy during trade rescissions and also boost the capital levels of the country instead of depending on foreign corporations for that purpose.
It should however be noted that the high rates of domestic savings in Singapore was as a result of a deliberate government program which was designed in a way that obliged all the citizens in the country had to make a compulsory contribution to the pension fund (Kim, 2006). This contribution was about 25% of the salaries of Singapore citizens. The government during this period was the largest provider of employment opportunities; it also had the control over a large percent of land of about 75%, it housed a large percentage of the population in apartment that were self owned. The government also controlled the wages level in the country (Yuen, 1991).
The government of Singapore emphasized on the need for its citizens to acquire high level of skills. In an effort to achieve social goals, the government of Singapore used taxation and budgeting. Up to 1984, the government of Singapore controlled the size of families through setting the number of children every family could have. Each family was restricted to have two children; any family which had more than two children the government imposed higher educational as well as medical costs on them. Surprisingly, the government in 1986 introduced tax rebates which were meant to persuade women who had attained collage education to get up to four offspring.
During the early 1990s, the Economic Development Board (EDB) established the Economic Development Board Investment Pte Ltd (EDBI). The was an investment arm of the Economic Development Board charged with the responsibility of initiating investments into various companies that were key in the growth of industrialization in the country and also to enhance innovations and technologies that were emerging. This arm of the Economic Development Board was therefore aimed at promoting novel growth in different areas of the economy in Singapore. In private equity for example, the EDBI established an Investment Fund for Technopreneurship known as Technopreneurship Investment Fund (TIF) for purposes of financing Singapore industrial venture.
According to a research conducted on the economic condition of Singapore, the manufacturing sector of the economy in 2006 contributed up to 28% of the country GDP. The goal of the Economic Development Board (EDB) is to ensure that the total output in manufacturing doubles to about S$80 billion by the year 2018. It is projected that that manufacturing sector over the next decade. The new target areas of the EDB is to promote lifestyle, educational, biomedical sciences, IT and software sectors, medical, and emerging growth businesses such as clean energy and water. For purposes of improving export performance in the Singapore, diversification of products would be very vital factor. For this reason, services and manufacturing have been acknowledged as the tow crucial engines in the economic growth of Singapore and the process of industrial reconstruction of the country.
Conclusion
Since the early 1960s Singapore as a country have had a remarkable economic development. It has even been suggested that today, Singapore is one of the countries with the most competitive and strongest economies in the world. The role of the Economic Development Board (EDB) cannot be overemphasized in the economic development of Singapore. The economy of Singapore was based on five main sectors. These sectors included: export-oriented manufacturing, the regional entrepôt trade, production of goods and services for use by the local consumers, refining of petroleum and shipping, and finally the international market with specialized services for instance tourism services, telecommunications services, as well as banking and finance services. The EDB was therefore, established with the primary objective of promoting rapid development in the economy, creating new employment opportunities, as well as spearheading rapid industrialization program in the country (Yuen, 1991). The EDB further, embarked on acquiring technology, information, manpower, and finance from all over the world, while at the same time promoting foreign investments. During the initial years when the EDB was formed, the board gave many industries tariff protection, tax holidays, pioneer status, as well as attracted numerous foreign investments.
The functions and responsibilities of the EDB became more complex with the development of industrial establishment in the country, and as such there was an urgent need to redesign the functions of this board for purposes of effective implementation of its mandate. The Economic Development Board (EDB) was given the authority to fund activities such as manpower development, industrial establishment, and provision of incentives, promotion, as well as development of industrial estates (Seetoh and Ong, 2008). To address this, the government of Singapore established the Development Bank of Singapore in 1968, which was a public limited company to take over from the EDB the function of industrial financing. Further, in the same year the government established the Jurong Town Corporation (JTC), another statutory board charged with the responsibility of developing industrial estate. The government of Singapore further took control of the essential factors of production for instance capital, labor, and land. Another factor that greatly contributed to the rapid economic development of Singapore is the high rates of savings within the domestic economy. These domestic savings in turn provided the much needed reserves to the country’s economy during trade rescissions and also boost the capital levels of the country instead of depending on foreign corporations for that purpose.
References
Haque, M. (2004). Governance and bureaucracy in Singapore: Contemporary
Reforms and Implications, International Political Science Review, 25 (2), 227– 240
Kim, P. (2006). Father Leadership: The Singapore Case Study, Emerald,
44(1), 24-45.
Seetoh, K., and Ong, A. (2008). Achieving sustainable industrial development through a
System of strategic planning and implementation: The Singapore model in T C Wong, B Yuen and C Goldblum (Ed) Spatial Planning for a Sustainable Singapore, Springer
Yuen, B. (1991). Planning and development of industrial estates in Singapore, Third World Planning Review,13 (1) 47-68.
Yuen, B. (2005). Singapore high technology cluster: origin and present situation, Journal of Property Research, 9 (1)247-260.
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